Correlation Between Rio Tinto and AIM ImmunoTech
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and AIM ImmunoTech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rio Tinto and AIM ImmunoTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto PLC and AIM ImmunoTech, you can compare the effects of market volatilities on Rio Tinto and AIM ImmunoTech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rio Tinto with a short position of AIM ImmunoTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and AIM ImmunoTech.
Diversification Opportunities for Rio Tinto and AIM ImmunoTech
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rio and AIM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto PLC and AIM ImmunoTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ImmunoTech and Rio Tinto is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rio Tinto PLC are associated (or correlated) with AIM ImmunoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ImmunoTech has no effect on the direction of Rio Tinto i.e., Rio Tinto and AIM ImmunoTech go up and down completely randomly.
Pair Corralation between Rio Tinto and AIM ImmunoTech
Assuming the 90 days trading horizon Rio Tinto PLC is expected to generate 0.26 times more return on investment than AIM ImmunoTech. However, Rio Tinto PLC is 3.88 times less risky than AIM ImmunoTech. It trades about -0.23 of its potential returns per unit of risk. AIM ImmunoTech is currently generating about -0.11 per unit of risk. If you would invest 501,600 in Rio Tinto PLC on September 25, 2024 and sell it today you would lose (31,600) from holding Rio Tinto PLC or give up 6.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Rio Tinto PLC vs. AIM ImmunoTech
Performance |
Timeline |
Rio Tinto PLC |
AIM ImmunoTech |
Rio Tinto and AIM ImmunoTech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rio Tinto and AIM ImmunoTech
The main advantage of trading using opposite Rio Tinto and AIM ImmunoTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, AIM ImmunoTech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AIM ImmunoTech will offset losses from the drop in AIM ImmunoTech's long position.Rio Tinto vs. Givaudan SA | Rio Tinto vs. Antofagasta PLC | Rio Tinto vs. Ferrexpo PLC | Rio Tinto vs. Atalaya Mining |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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